The automotive sector is one of Mexico’s most significant industries, employing over one million people throughout the country. The sector is divided between passenger vehicles and heavy vehicles for cargo, construction, and agriculture. Mexico is the sixth largest passenger vehicle manufacturer in the world, producing 3.7 million passenger vehicles annually. It is the fifth largest producer of auto parts worldwide with USD 99 billion in annual revenues, comprising the largest export market for U.S. auto parts. Mexico is the sixth largest manufacturer of heavy-duty vehicles for cargo and the largest tractor truck exporter worldwide, accounting for the most heavy-duty vehicle exports to the United States. It is also the fourth largest exporter of heavy-duty vehicles for cargo and the second largest export market for U.S. heavy-duty trucks.
The size of Mexico’s passenger vehicle market and its shared border with the U.S. provide a robust market for Original Equipment Manufacturers (OEMs) and aftermarket auto parts. In addition, investments by established automakers and new OEMs have attracted strong Tier 1 and Tier 2 supplier bases. Due to COVID-19, light vehicle production declined about 20 percent in 2020 and auto parts were expected to decline 24 percent for the year. Automotive manufacturers are primarily concentrated in the northern region of Baja California, Sonora, Chihuahua, Coahuila, Nuevo Leon, and San Luis Potosi. OEM plants are also based in Guanajuato, Aguascalientes, Jalisco, Estado de Mexico, Hidalgo, Morelos, Puebla, and Veracruz. In terms of supply chains, auto parts producers are located close to these plants, principally in Coahuila, Chihuahua, Nuevo Leon, Guanajuato, and Estado de Mexico, although they are also found in other parts of the country. The heavy-duty manufacturing plants are mainly concentrated in northern Baja California, Coahuila, Nuevo Leon, San Luis Potosi, Guanajuato, Queretaro, and Hidalgo.
The Mexican Automotive Industry Association estimates that Mexico will become the fifth largest global vehicle producer by 2025. In 2019, Mexico ranked as the sixth largest light vehicle producer with 3.8 million units. Out of this production, 64 percent were SUVs, minivans, and pick-ups, while the remaining 36 percent were heavy-duty vehicles. Established automakers in Mexico include Audi, Baic Group, BMW, Stellantis, Ford, General Motors, Honda, Kia, Mazda, Nissan, Toyota and Volkswagen. Mercedes Benz’s production is in partnership with Nissan-Daimler. Hyundai produces through its Kia partner and Toyota opened its second plant in Apaseo el Alto, Guanajuato last year. The industry, with over one million jobs and 300 R&D centers, produces more than 50 brands and over 500 models through a network of 2,361 dealerships nationwide. Around 90 percent of vehicle production in Mexico is devoted to exports, with 79 percent going to the United States.
Vehicle sales decreased by seven percent, with 1.3 million units sold in 2019 compared to 1.4 million units in 2018. Light vehicle sales dropped further to 949,353 units in 2020. Among domestic vehicle sales, Nissan is the top seller, followed by General Motors, Volkswagen, Toyota, Kia, Honda, Stellantis, Mazda, Ford, Hyundai, and others. These brands represent 82 percent of the market in terms of sales. The OEM auto parts market represents USD 73 billion, making Mexico the fifth largest producer of auto parts, with over 2,500 companies in the sector. Over 600 of these companies are Tier 1 suppliers. U.S. manufacturers of auto parts operating in Mexico represent 18 percent of all companies, followed by Japan, Germany, Canada, France, and South Korea. The industry is deeply integrated between the United States and Mexico, with Mexico importing 49.4 percent of all auto parts from the United States. In turn, Mexico exports 86.9 percent of its auto parts production to the United States.